Fitch lowers Astoria Financial’s ratings outlook

Fitch Ratings said Friday that it has downgraded its ratings outlook for Astoria Financial Corp. to ‘Negative’ from ‘Stable,’ citing the savings and loan association’s weak financial performance versus that of similar companies.

Astoria Financial is the holding company of Astoria Federal Savings and Loan Association.

The company’s operating performance has remained stagnant through the first nine months of this year, as income has declined but expenses have increased, Fitch said.

Astoria also has struggled to grow its loan portfolio, and its balance sheet has decreased 10 percent over the past year, the firm said.

In addition to weaker financial performance than similar companies, Fitch noted that Astoria Financial has $250 million in senior notes due in the fourth quarter of next year.

The holding company has a limited amount of liquid assets and relies on quarterly dividends from its subsidiary, which require regulatory approval. Should that approval become an issue, given the due date on the senior notes, Fitch said it is somewhat concerned that Astoria Financial could be exposed to risk. That’s because of the limited amount of investor appetite for bank paper, Fitch said.

On the positive side, Fitch said it affirmed Astoria Financial’s ratings to reflect the company’s ability to remain profitable through the credit cycle, even as many banks have recorded losses.